Cook County demands Kellogg's cough up $2.1 million for allegedly bummed steam heat at SW side plant

By Jonathan Bilyk | Feb 1, 2016

Cook County has served up a demand for more than $2 million to the Kellogg Company, demanding the maker of breakfast cereals, cookies and other foods cough up the money the county says Kellogg owes for more than a decade’s worth of steam heat provided to a Kellogg’s plant on the city’s southwest side, across the street from the Cook County Jail.

On Jan. 26, Cook County State’s Attorney Anita Alvarez, on behalf of the Cook County government, filed suit in Cook County Circuit Court against Battle Creek, Mich.-based Kellogg, alleging the company has essentially been bumming steam heat since 2005 from taxpayers, by way of a county-owned steam heat generation plant near the county jail and the Kellogg’s facility at the corner of West 31st Street and Sacramento Avenue, just north of the Stevenson Expressway.

The county said Kellogg owes more than $2.1 million for the heat.

According to the complaint, the county in the early 1970s purchased from the city of Chicago a “municipal heating plant” located in the 3000 block of S. Sacramento Avenue, just north of 31st Street. According to the purchase agreement, the county agreed, as a condition of the sale, to continue to provide steam heat to a number of nearby buildings, including a warehouse building at the southeast corner of Sacramento and 31st Street, then owned by the city and designated in the county complaint as 3216 S. Sacramento Avenue.

According to the complaint, the building eventually ended up under the ownership of Kellogg’s, “through a series of transfers, bankruptcies, mergers and the like,” in June 2005.

And since that time, the county said, Kellogg has not paid any money for the steam heat generated at the county plant.

According to the complaint, the county served Kellogg with invoices on several occasions in 2015 for amounts greater than $2 million, but has received no reply. The county said it told Kellogg it would turn off the steam heat this year if they did not pay up. The county issued the last such notice in October, the complaint said.

However, “Kellogg Company has not compensated the county for the steam provided from June 29, 2005, to present … and refuses to do so,” the complaint said.

The county complaint argued only properties owned in the area by the city of Chicago had the right to free steam heat under the 1973 purchase agreement, not buildings formerly owned by the city and transferred to private ownership.

“The right to steam heat at no cost is an exclusive right by the city and does not create a right in any future owners,” the county said.

The complaint included two counts, asking the judge to declare the county has no obligation to provide free steam heat to the Kellogg’s plant, and alleging Kellogg’s has been unjustly enriched at taxpayers’ expense.

“Kellogg Company knew the provision of steam heat would not ordinarily be free of charge,” the county complaint said. “Kellogg Company has accepted and benefited from the steam heat provided by the county.”

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Organizations in this Story

City of Chicago Cook County Kellogg Company of Battle Creek

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